Despite a later rally, a disappointing first half depressed full year figures at call centre software specialist Netcall.

Sales at the St Ives-based company, whose software enables call centres to cut their queues, fell from £4.1m to £3.6m, dragging pre-tax profits back from £0.8m to £0.5m. A tax credit however, meant earnings per share actually increased, from 1.16p to 1.62p.

Chief executive Henrik Bang explains that in the first half tough times felt by clients, especially in the financial services sector, had a knock-on effect for the business. ‘So we changed our approach, started focusing more on other sectors, and in the second half, we got back up to the level of the previous year.’

Despite revenues falling, Netcall continued to sign new clients ‘at the same rate’, doing particularly well in the travel industry, but financial services still accounts for a worrying 50% of revenues. Bang, however, sees the potential decimation of call centre staff in this industry as a potential fillip for demand and also points to a growing level of business wins (now 50%) coming from distribution partners such as BT and Cable & Wireless.

Another positive is that the company’s cash position improved by 24% to £2.9m, thanks in part to an expansion in gross margin from 87% to 89% and a 4% decrease in costs. Bang says that cash has since increased in the new financial year to ‘over £3.5m’ – more than half the company’s market value.

However, as was proved in the first half, external conditions can have a strong effect on Netcall and the risk of a repeat remains. Thus, although risk lovers may think the shares are as cheap as chips, they may remain unsavoury to many until the business proves itself more robust.

Netcall	AIM	£7.98m	12.75p	0.00p
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